Why Madrigal Pharmaceuticals Stock Was Plummeting This Week

Core Insights - Madrigal Pharmaceuticals reported preliminary financial results that exceeded analyst expectations, yet the stock price declined nearly 20% in the past week, indicating high investor expectations [1][2]. Financial Performance - The company announced preliminary earnings of $100 million to$103 million for Q4 from its drug Rezdiffra, aimed at treating metabolic dysfunction-associated steatohepatitis (MASH) [2]. - For the full year 2024, Madrigal projected revenues from Rezdiffra to be between $177 million and$180 million, with over 11,800 patients using the medication by year-end [2]. Analyst Ratings - Analyst expectations were surpassed, leading to bullish updates from analysts. Goldman Sachs maintained a buy recommendation with a price target of $530, while Evercore ISI raised its fair value estimate from$360 to $392, also maintaining an outperform rating [3]. Market Reaction - Despite positive financial indicators and analyst optimism, the stock experienced selling pressure, suggesting that investors may be overly optimistic about Rezdiffra's growth potential or are impatient for the drug to demonstrate higher growth rates [4].